Beyond the hype: Understanding IPO (over)valuation

Zoran Filipovic and Biljana Seistrajkova
Additional contact information
Zoran Filipovic: DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

Working Papers from HAL

Abstract: IPOs frequently exhibit substantial price gains, which tend to diminish over time. We examine this phenomenon by focusing on the behavior of sophisticated and well-informedmarket participants, specifically short sellers and stock analysts. Our findings suggest thatfirst-day closing prices often exceed fundamental values, driven by attention and sentimentfueled buying pressure. Short sellers exploit these valuation distortions, likely at the expense of optimistic individual investors. Subsequently, analysts issue relatively conservative initial stock recommendations, contributing to a long-term decline in stock prices.Overall, waiting for post-IPO enthusiasm to subside may help investors avoid the overvaluation inherent in newly listed stock

Keywords: Initial public offerings; IPO underpricing; Short selling; Analysts recommendations; Investor attention; Media covera (search for similar items in EconPapers)
Date: 2024-12-17
Note: View the original document on HAL open archive server: https://hal.science/hal-04843500v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-04843500v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-04843500

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().